The Onion started up at UW-Madison during my freshman year in 1988-89. In those days it was mostly coupons (it was a sort of coupon newspaper with a few satirical articles mixed in), but now, 12 years later, it is "America's Finest News Source".
It's funny that anyone would believe the Onion was a real paper, but I remember having a VERY hard time convincing my sophomore-year Korean roommate that Wisconsin Governor Tommy Thompson had not actually declared May 4th "State Masturbation Day".